Pharma disrupter

Nonprofit drugmaker targets supply, costs

From drugmakers’ role in the opioid crisis to Mylan’s price-gouging on the EpiPen to the antics of now-imprisoned “pharma bro” Martin Shkreli, U.S. pharmaceutical companies have a well-deserved reputation for rapacity.

Perhaps competition from Civica Rx, a coalition of health care systems and philanthropies, can help to change that. Allegheny Health Network and 11 other hospital systems last week became the newest “founding members” of Civica Rx, joining the three philanthropies and seven health systems that established the nonprofit generic drugmaker in September.

The company intends to make drugs frequently in short supply at hospitals, ensuring a more reliable supply while lowering patient costs by giving existing drugmakers new competition for market share. It intends to provide the drugs to its 750 member-hospitals and the Department of Veterans Affairs. On its website, the company asserts that “prices for generic drugs used in hospitals can be reduced to a fraction of their current costs,” saving health systems and patients hundreds of millions of dollars annually.

In another break with industry practices, Civica Rx is promising transparency in drug pricing, saying all of its member hospitals will have insight into manufacturing costs and will pay the same amounts for a drug.

For now, the company will focus on making injectable drugs that hospitals use for impatient and outpatient care. Later, the company says, it may “change that focus to impact other areas of care.” Its entry into the prescription drug market would be another potential boon to consumers who are weary of sky-high prices at the pharmacy.

Some of the nation’s most respected names in health care — the Mayo Clinic, NYU Langone Health and Providence St. Joseph Health, among others — have lent their credibility to the cause. Notable also is the inclusion of the philanthropies — the Laura and John Arnold Foundation, the Peterson Center on Healthcare and the Gary and Mary West Foundation — whose role is to nurture the company’s mission as a “public asset.”

Ensuring a more reliable supply of drugs, greater transparency, lower prices for patients, a commitment to the public good— it all sounds too good to be true for a pharmaceutical company. If Civica Rx lives up to its ideals, it could significantly alter the pharmaceutical industry and help millions of Americans achieve better health.